Massachusetts – September 20, 2010

What We Did

GAO's work in Massachusetts focused on (1) the commonwealth's use of Recovery Act funds for selected programs, (2) the approaches taken by Massachusetts agencies to ensure accountability for Recovery Act funds, and (3) impacts of these funds. We reviewed several specific programs funded under the Recovery Act in Massachusetts related to education, highways, transit systems, and public housing. We selected the programs we reviewed because all have significant funds awarded, as discussed below. For descriptions and requirements of the programs we covered, see appendix XVIII of GAO-10-1000SP.

In conducting our, we contacted state agencies and some localities responsible for implementing the programs. We contacted the state education office and the Springfield local educational agency. We followed up on ongoing Recovery Act projects at the Massachusetts Department of Transportation and Massachusetts Bay Transportation Authority, which included a review of quality assurance procedures for Recovery Act projects. We contacted the Boston Housing Authority, which received Public Housing Capital Fund formula and competitive grant awards.

We also continued to track the use of Recovery Act funds for state and local fiscal stabilization and the oversight of funds. We contacted state officials at the state's central management agency addressing fiscal issues and handling of Recovery Act funds, as well as officials at state oversight agencies. We also met with officials from the City of Boston to discuss its use of Recovery Act funds, including funding from the Energy Efficiency and Conservation Block Grant, and the city's fiscal condition. Finally, we contacted oversight officials in both Massachusetts and Boston to receive an update on their continuing review and audit of various Recovery Act programs.

Recovery Act education programs

Massachusetts has been awarded over $1 billion in Recovery Act funds through three major education programs, the largest of which is the State Fiscal Stabilization Fund (SFSF) with an allocation of close to $994 million. These funds were awarded, in part, to help state and local governments stabilize their budgets by minimizing budgetary cuts in education and other essential services. As of July 16, 2010, the commonwealth had drawn down 80 percent of its SFSF funds. Massachusetts has also made progress on its SFSF oversight efforts by selecting a public accounting firm to conduct SFSF supplemental reviews of 15 local educational agencies (LEA).

Highway infrastructure investment

Massachusetts has begun construction on 78 of 84 Recovery Act highway projects for which funding was obligated prior to the March 2, 2010, obligation deadline. As of August 2, 2010, 9 of the 84 projects have completed construction. Massachusetts continues to lag behind the national average on its reimbursement rate. According to a state official, approximately $30 million have been deobligated from highway contracts as a result of contracts being awarded below state cost estimates. A state official stated that they plan to have all deobligated funds obligated to other projects by the September 30, 2010, deadline–including one noteworthy project to rehabilitate River Road in Tewksbury, which was washed out in the March 2010 flooding. State officials report that some deobligated suballocated funds may be obligated to other projects outside of their initially intended region.

Transit Capital Assistance funds

Massachusetts and its urbanized areas have expended $85.6 million of its initial Recovery Act Transit Capital Assistance apportionment on several projects, including some that are nearing completion. An additional $59.7 million was transferred from the Federal Highway Administration, which included $24.8 million that originated from funds that were initially apportioned to suballocated regions in the state. These funds will go back to suballocated regions for additional projects at regional transit agencies, including a parking garage at the Wonderland Station in Revere, emergency repairs on the Massachusetts Bay Transportation Authority's (MBTA) Red Line subway, and vehicle and equipment purchases and terminal improvements for the Cape Cod Regional Transit Authority. At the request of the U.S. Department of Transportation, Massachusetts will recalculate its planned transit expenditures to include additional state funds allocated to MBTA which will help the commonwealth meet the September 30, 2010, maintenance-of-effort deadline for transit expenditures. Finally, our review of MBTA's quality assurance procedures revealed that it uses a construction management firm to perform daily oversight of several of its Recovery Act-funded projects and MBTA has procedures in place to independently verify the firm's performance.

Public Housing Capital Fund

Public housing agencies in Massachusetts received about $82 million in Public Housing Capital Fund formula grants and about $73 million in Public Housing Capital Fund competitive grants. All 68 housing agencies that received formula grants obligated all of their grant funds by the required deadline of March 17, 2010, and 63 housing agencies had drawn down a cumulative total of about $41 million as of August 7, 2010. Of the seven housing agencies that also received about $73 million in Public Housing Capital Fund competitive grants, five agencies had drawn down a cumulative total of $6 million as of August 7, 2010. The Boston Housing Authority (BHA) received a $33.3 million formula grant and over half of the $73 million in competitive grant funds (about $40 million) for Massachusetts. For example, BHA received about $22 million in competitive funds to begin rebuilding its Old Colony development in South Boston as an energy-efficient and green community. The U.S. Department of Housing and Urban Development (HUD) regional office in Massachusetts has conducted quality reviews of Public Housing Capital grant funds and is assisting public housing agencies with meeting Recovery Act requirements.

Massachusetts government's and cities' use of Recovery Act funds

The Commonwealth of Massachusetts continues to experience budget pressures, although state officials report that tax revenue should trend higher during the current fiscal year. Recovery Act funds continue to support the commonwealth's operating budget for fiscal year 2011, but less than in the previous 2 fiscal years. Also, officials report they are preparing for when Recovery Act funding will no longer be available, mostly through a combination of spending reductions and availability of state "rainy-day" funds. Boston officials told us that while Recovery Act funds have strengthened the city's economy and Boston has experienced some revenue growth in the last year, the city's costs are increasing and layoffs are expected in fiscal year 2011. City officials expressed concern for the fiscal challenges ahead, and they are taking steps to try to mitigate the impact of the loss of Recovery Act funds.

Oversight and accountability efforts

The Massachusetts Office of the State Auditor has several audits under way focused on programs funded by the Recovery Act, including audits of various local housing authorities, state and community colleges, regional transit authorities, and the Massachusetts Department of Transportation. The state Inspector General has concentrated its Recovery Act efforts on prevention initiatives, as well as on monitoring, reviewing, and investigating a variety of Recovery Act-funded programs. Officials from Boston's City Auditor's office told us that their independent auditor will conduct Boston's Single Audit for fiscal year 2010 (ended June 30), which will include an audit of 10 of the city's Recovery Act-funded projects.

Recipient reporting

The Massachusetts Recovery and Reinvestment Office (MRRO) has redesigned Massachusetts's Recovery Act Web site to facilitate users' ability to track, as well as map, Recovery Act jobs and dollars by ZIP code, town, county, and congressional district. The redesigned Web site also includes a link to Recovery Act data reported by nonstate entities, such as housing agencies and regional transit agencies. The MRRO has begun to use Recovery Act data to monitor spending across state agencies and provide increased oversight to state agencies that have slower rates of Recovery Act spending and obligation.